KakaoTalk operator trapped by fund shortfall as venture business

KakaoTalk operator trapped by fund shortfall as venture business

Won Yo-hwan

2013.11.13 15:21:12

Kakao, operator of South Korea’s largest mobile messenger KakaoTalk, is facing hard times. KakaoTalk grew exponentially until last year, spurring the mantra “whatever KakaoTalk does becomes success.” But the mobile phone messenger application is not as influential as it used to be. Its competitors Line and WeChat, meanwhile, are gaining edges in the global market. Eyes are on how Kakao, the big player in the mobile start-up industry, will break through the situation. What has been undermining the KakaoTalk’s platform? First, KakaoTalk has lost momentum in the game business. The mobile messenger app offered its own platform-based games Anipang and DragonFlight, which were downloaded 20 million times shortly after release last year. But none of the KakaoTalk-based games launched this year have been downloaded 20 million times so far.
Another tragedy for KakaoTalk is that rivals like Line and WeChat have secured dominant presence in the overseas market, just like KakaoTalk gained a leading share in the domestic market earlier. The messenger app needs to enter foreign markets as the domestic market has become saturated, but the overseas mobile messenger market is already controlled by Line and WeChat.
Kakao’s another urgent task is to diversify its business portfolio, which now heavily relies on KakaoTalks’ games.
More fundamental reason behind the poor performance is that Kakao lacks funding like other venture firms. If the company does not gain a strong foothold in the market in the early phase, instead it needs to aggressively undertake marketing activities. But the fund shortage puts Kakao behind its rivals in the competition.

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About Koon Boon Kee
Bamboo Innovator Institute is set up to establish the thought leadership of resilient value creators around the world. KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia. The Moat Report is developed together with our European partners The Manual of Ideas (www.manualofideas.com), the idea-oriented acclaimed monthly research publication for institutional and private investors. The MRA’s paid-subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities and savvy private individual investors. KB has presented his thought leadership as a keynote speaker in global investing conferences with speakers including famed serious investors Donald Yacktman, Howard Marks, Jean-Marie Eveillard etc. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, macroeconomic and industry trends in Singapore, HK and China. KB has been rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm since 2002. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Mirae Asset Global Investments, Korea’s largest mutual fund company. He holds a Masters in Finance and degrees in Accountancy and Business Management, summa cum laude, from the Singapore Management University (SMU). He had also taught accounting at the SMU. He had published cutting-edge empirical research in the Special Issue of Istanbul Stock Exchange 25th Year Anniversary of the Boğaziçi Journal, Review of Social and Economic Studies, as well as wrote articles about value investing and corporate governance in the media.

2 Responses to KakaoTalk operator trapped by fund shortfall as venture business

  1. Pingback: The next Asian messaging app exit may be worth more than $19b | EN.SamacharYug.com

  2. Pingback: The next Asian messaging app exit may be worth more than $19b / Bubbly Blog

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